18th Sep 2006 07:02
Burren Energy PLC18 September 2006 Burren Energy plc ("Burren" or "the Group") Interim Results for six months ended 30 June 2006 Burren Energy (LSE:BUR), the independent oil and gas exploration and productioncompany, today announces its interim results for the six months ended 30 June2006. Highlights Financial • Net profit up 69% to US$140.2 million (H1 2005 : US$ 82.9 million) • Operating cash flow after tax up 87% to US$191.4 million (H1 2005 : US$102.1 million) • Discount to Brent improved by 23% to $5.29 per barrel (H1 2005 : US$6.88 per barrel) • Earnings per share up 67% to US cents 100.0 (H1 2005 : US cents 59.9) • Interim dividend per share increased by 60% to 4.0 pence (2005 : 2.5 pence)* • Cash balances at 30 June 2006 of US$215.7 million Operational • Exploration success in Turkmenistan and Congo. • Working interest production up 14% to 33,300 bopd (H1 2005 : 29,100 bopd) with August 2006 average of 35,000 bopd. • Positive initial results from water-injection pilot in Turkmenistan. • Independent certification of Turkmenistan gas reserves. • La Noumbi (Congo) and North Lagia (Egypt) licence awards ratified. Corporate Development • Finian O'Sullivan has been appointed President, a full time executive position, to focus on the strategic and corporate development of the business with the intention of generating new core assets for Burren. • Atul Gupta, who joined Burren in 1999 as Chief Operating Officer, has been appointed Chief Executive Officer. Finian O'Sullivan, President, commented: "Burren has continued its significant growth over the last few years leadingagain to record profits and cash flow. In addition we are beginning to see thebenefits from our planned shift to exploration drilling with encouraging newfinds in Congo and Turkmenistan, which we look forward to appraising. With thechange in my role to focus solely on developing new businesses, I am delightedto welcome Atul Gupta, who has been associated with Burren and myself since1993, to take up the role of Chief Executive." * Declared after the balance sheet date 18 September 2006 Enquiries Burren Energy Tel : 020 7484 1900---------------Finian O'Sullivan, PresidentAtul Gupta, Chief Executive OfficerAndrew Rose, Chief Financial Officer Pelham PR Tel: 020 7743 6676James HendersonAlisdair Haythornthwaite Chairman's Statement In the first half of the year Burren has again delivered record financialresults underpinned by increased production, rising oil prices and an improveddiscount to Brent. We are encouraged by the initial results of our explorationprogramme where new discoveries have been made in Congo and Turkmenistan whichwill require appraisal drilling to determine their extent. Burren has over the last few years developed into a significant oil and gasbusiness. The last twelve months have seen a shift towards more integrateddevelopment of the Group's two core fields in Congo and Turkmenistan,encompassing various aspects of primary and secondary recovery and an expansionto its exploration drilling programme. With our strong balance sheet we are wellplaced to target and acquire new assets. We recognise that in an increasinglycompetitive market place, finding and developing new opportunities in acost-effective manner will require more efficient use of management skills. Tothat end, I am very pleased to announce that Finian O'Sullivan will take on theposition of executive President focussing on new ventures whilst Atul Gupta, whojoined Burren in 1999 as Chief Operating Officer, will take over as ChiefExecutive. Given the scale of the Group today, the Board believes this cleardelineation of roles positions Burren for the next stage of its development. I am happy to report that Burren's safety performance in the year to datecontinues to be excellent, with no serious injuries or fatalities among staff orcontractor personnel. In terms of HSEC governance, we have now become a memberof the Extractive Industries Transparency Initiative, a UK government-sponsoredprogramme to promote transparency in our industry. Operations Review Turkmenistan - Exploration and Appraisal (Burren 100%) 2006 has seen drilling emphasis switch from development to exploration withthree deep exploration wells completed and two in progress. The main results todate are as follows: Well B 062, drilled on the south east flank of the Burun field, logged a totalof 50 metres of pay, of which 13 metres were perforated and flowed at a maximumrate of 1,450 bopd with varying quantities of water. This well has been put onproduction. Well B 064, on the south flank of the Burun field, initially tested a 17 metreinterval in a high pressure zone which proved to be of low permeability flowingoil at about 70 bopd. The well is currently being re-completed to a higher 8metre zone. Well NDD 022, located 3.5 km to the east of the Burun field in the ExplorationArea of the licence, logged 68 metres of hydrocarbons at varying depths and isin the process of being sequentially tested. Both of our deep drilling rigs are occupied in the Exploration Area to the eastof Burun where exploration drilling has to be completed by February 2007 priorto relinquishment. The second well in the newly discovered shallow oil field at Nebit Dag East,renamed Uzboy, confirmed the results of the discovery well and has been put onproduction. Plans are to continue drilling appraisal/development wells to assessthe full extent of the accumulation. The five shallow exploration wells on the Kara Tepe and Urundzhuk prospects atthe eastern end of the PSA area were plugged and abandoned. Turkmenistan - Development and Production (Burren 100%) As a result of the shift to exploration drilling described above, gross Burunfield production dipped during H1 to average 18,600 bopd, 2% lower than H1 2005,but has increased subsequently and is currently 20,500 bopd . A total of threedevelopment wells (two deep, one shallow) have been drilled in Burun with allthree on production. The two deep wells produced at initial rates of 2,000 bopdand 600 bopd whilst the shallow well produced at 250 bopd. Water injection commenced into both deep and shallow reservoirs with a currentaggregate injection rate of approximately 6000 bwpd into four wells. Although itis too early to make quantitative assessments, the results of one of the shallowobservation wells have indicated a production uplift of some 54%. We areencouraged by the reservoir injectivities seen so far and are now proceedingwith the expansion of the water-injection system to a capacity of 35,000 bwpd. The Group is in discussion with the Government of Turkmenistan regarding thepossible export of gas from the Burun field. Two schemes are being discussedone, involving the use of existing gas pipelines to which Burun is alreadyconnected and the other involving a new 32 km link to a main gas export line.Indicative plateau rates are 200 mmscfd of gas. In parallel , the Company hasrecently obtained independent certification of gross technical Probable gas andcondensate reserves, dated 31 December 2005, amounting to 535 bcf of gas and 22mmbbls of condensate (working interest: 395 bcf and 22 mmbbls). In the absenceof an agreed gas price no volumes can be allocated to the Proven category.Furthermore these Probable reserves will only be booked by the Group once theroute, pricing, and other contractual details have been better defined. We also note press reports that the Government of Turkmenistan has agreed a 54%increase in Turkmen gas export prices (at the northern Turkmen border) to $100per thousand cubic metres. Congo - Exploration and Appraisal The Loufika-1 exploration well, drilled some 35 km to the south-east of M'Boundifield, has logged 50 metres of a new shallow hydrocarbon play at a depth of 550- 600 metres. This zone is being tested and, if successful, will require furtherappraisal drilling. The well did not encounter the main Vandji objective,drilling instead we believe directly into a fault. Consequently the Vandjiprospect will be re-drilled away from the fault. A further four exploration prospects, including one in the newly ratified LaNoumbi permit (Burren 37%), are planned to be drilled during the rest of theyear and early into next year, with two rigs committed to exploration from Q42006. Of the two earlier appraisal / exploration wells, to the south and outside ofthe mapped M'Boundi field, well MBD-2001 initially flowed up to 1,000 bopd butthen declined owing to a rapid increase in water and is currently suspendedpending further testing. Well MBD-2002 did not encounter any reservoir and hasbeen plugged and abandoned. Bouboussi-1, drilled within the Kouakouala Permit (Burren 25%), failed to findcommercial hydrocarbons. Congo - Development and Production M'Boundi field gross production (Burren 31.5%) in H1 2006 was 57,300 bopd, up49% over H1 2005. During August the field averaged 56,600 bopd from 52 wells.To-date this year, 17 development wells have been completed or are in progress afurther seven wells planned for the rest of the year, including a total of threewater-injectors. The water injection itself is scheduled to start in October ata planned initial rate of approximately 20,000 bwpd increasing to 60,000 bwpd bythe middle of next year. Kouakouala gross production (Burren 25%) was 1,030 bopd. Middle East Egypt On the East Kanayis block (Burren 100%), 3D seismic data has been acquired overan area of 520 km(2) to evaluate structures in the Jurassic layers andinterpretation is expected to be substantially completed by year-end inpreparation for drilling next year. As reported earlier, three shallow wellstargeting Cretaceous prospects did not find hydrocarbons and two further wellsare planned early next year. On the North Hurghada Marine block (Burren 100%) a high resolution aeromagneticsurvey has been carried out and the results incorporated into the ongoingevaluation. Tenders for a 3D seismic survey are under preparation. Explorationdrilling is expected to start in Q4 2007. The North Lagia PSC (Burren 90%) awaits final Ministerial signature, which willbe followed by 2D seismic acquisition in 2007. Yemen The award of Block 6 (Burren 92%) has now been ratified by parliament and thePSA became effective in June. Collection of existing 2D seismic data hascommenced and a tender for a new 3D seismic campaign is being organised.Exploration drilling is expected to start in the second half of 2007 and we notewith interest the recently announced significant fractured basement discovery inthe adjacent block (S2). Oman Formal government approval to Burren's farm-in to 40% of the offshore Block 50has been received and the operator, Hunt, is preparing for a 2,500 km 2D seismicacquisition in Q4 2006. India HOEC has commenced drilling the first of two exploration wells on the CY-OSN-97/1 license (HOEC 80%) which covers an area of 3,075 km(2) in the shallow watersof the Cauvery basin offshore Tamil Nadu state. After the first CY-OSN-97/1 wellthe rig will drill and test a horizontal development well on the neighbouringPY-1 gas field before coming back to drill the second exploration well. HOEC has launched a Rs 1,500 million (US$33 million) rights issue to part-fundthis activity and Burren will be taking up its 26% rights. The legal case between HOEC (Burren 26%) and Hardy Oil & Gas plc relating to thelatter's claim to certain rights under a shareholders agreement was resolved byarbitration in June, confirming that Hardy has no claim to any pre-emptionrights over Burren's 26% holding in HOEC. Shipping The shipping business made a small loss during the period but is expected to beprofitable over the year as a whole, since the second half is typically thestronger of the two. Outlook The outlook for Burren remains very exciting. We are part way through anextensive exploration programme in Congo and Turkmenistan which has alreadyyielded some positive results. We are making sound progress with ourwater-injection programmes, which have the potential to add significantincremental value in our two core fields. With no debt and a healthy cashbalance, we shall equally be working hard to add new opportunities to ourportfolio. The changes in management announced today serve to re-enforce the above and Ilook forward to the remainder of 2007 and beyond with confidence. Keith Henry Chairman Financial Review Selected Operational & Financial Data H1 2006 H1 2005 +/- %Production: working interest basis bopd 33,300 29,100 14%Production: entitlement basis bopd 19,200 22,200 -14%Entitlement fact % 58% 76% Sales volume mmbbls 3.85 3.68 5% Average discount to Brent $/bbl 5.29 6.88 -23%Average realised price / bbl $/bbl 60.48 43.89 38% Production cost / bbl (working interest) $/bbl 2.45 2.56 -4%DD&A /bbl (entitlement basis) $/bbl 8.81 8.01 10% Working interest production increased by 14% compared with H1 2005, to anaverage of 33,300 bopd (H1 2005 : 29,100 bopd). Of this Turkmenistan accountedfor 15,000 bopd* and Congo for 18,300 bopd. Entitlement production was 19,200bopd, 14% below that in H1 2005 as both the higher oil price and the achievementof full cost recovery on the Burun and M'Boundi fields increased the Governmentshare of the oil. These figures reflect the transfer of 3.5% of M'Boundi to SNPCwith effect from 1 January 2006 : on a like-for-like basis the working interestproduction would have been 35,300 bopd, an increase of 21%. Despite the decline in entitlement production, sales volumes increased by 5%compared with H1 2005 to 3.85 mmbbls as the liftings schedule was maintained,and this, coupled with a 38% increase in the average realised price to US$60.48/bbl, drove revenues up by 42% to US$239.0 million. The average discount toBrent at which the group's oil was sold improved by 23% to a discount of US$5.29/bbl (H1 2005 : US$6.89/bbl). Having been in a significant under-lift positionat year end 2005, as a result of sales exceeding entitlement production duringH1 2006 the group was over-lifted at 30 June by some 115,000 barrels. Cost of sales, at US$64.3 million, was 31% above that for H1 2005 (US$49.2million, ignoring the non-recurring hedging costs of US$14.3 million in thatperiod). However this includes a US$12.1 million charge in respect of themovement in the group's under-lift/over-lift position (H1 2005 : US$2.7mcredit). Adjusting for these movements, the underlying increase in cost of saleswas less than 1%. Within cost of sales the depletion charge per barrel increasedslightly to US$8.81/bbl (H1 2005 : US$8.01/bbl). Excluding costs attributable tothe shipping business, the production cost per working interest barrel reducedslightly to US$2.45/bbl (H1 2005 : US$ 2.56/bbl). Administrative expenses, at US$6.0 million, were 7% less than in H1 2005. US$7.4million of pre-license costs, relating to new business initiatives in the FormerSoviet Union, and a $6.0 million impairment of exploration expenditure relatingto Egypt, were expensed, and a charge of US$0.6 million was recorded in relationto the part-disposal of the shipping business reflecting the period between thetransaction's effective date and completion. Burren's share of HOEC's net incomeamounted to US$1.4 million (H1 2005 : US$0.5 million) As a result of the above, operating profit increased by 59% to US$156.1 million(H1 2005 : US$98.1 million). Net interest income added US$3.1 million. The taxcharge increased from US$14.2 million to US$19.0 million, all arising inTurkmenistan, leaving net profit up 69% at US$140.2 million. An interim dividendpayment of 4.0p per share (H1 2005 : 2.5p) has been recommended. Cash flow from operations increased by 109% to US$217.4 million (H1 2005 : 103.8million). Of this, working capital reduction provided US$23.1 million, comparedwith an opposite working capital increase of US$33.1 million in H1 2005.Excluding working capital movements, the underlying increase in cash flow fromoperations was 42%. Tax paid was US$26.7 million (H1 2005 : US$1.6 million).Capital expenditure, including expenditure classified under intangible assets,totalled US$101.1 million of which US$64.6 million was development expenditure,US$30.3 million was exploration and US$6.2 million was incurred towards thepurchase of two drilling rigs. A further US$8.1 million was placed in escrow toguarantee future exploration commitments. US$4.5 million was received from thepart disposal of the shipping business and a net US$4.1 million was receivedfrom interest income or the exercise of share options. As a result cash balancesincreased by US$90.6 million during the period. The Group's balance sheet is very strong, with cash of US$215.7 million and nodebt outstanding. The sale of the 3.5% interest in M'Boundi, which was completedafter 30 June, was accounted for as an asset held for sale (book value US$17.3million), with an associated liability of US$7.7 million reflecting net amountsowed in relation to the period between the transaction's effective date of 1January 2006 and completion. * Working Interest production in Turkmenistan excludes the Initial Oil of 3600bopd to which the state is entitled outside the terms of the PSA. Group Income Statement Unaudited Unaudited Audited 6 months to 6 months to Year Ended 30 June 30 June 31 December 2006 2005 2005 NOTES US$'000 US$'000 US$'000 REVENUE 2 238,970 168,080 390,333Losses on oil price derivativecontracts - (14,277) (13,760)Other cost of sales (64,332) (49,215) (104,678) -------- -------- ---------Total cost of sales (64,332) (63,492) (118,438) -------- -------- ---------GROSS PROFIT 174,638 104,588 271,895Charge in respect of incentiveschemes (2,697) (2,518) (7,431)Other administrative expenses (3,283) (3,914) (7,995) -------- -------- ---------Total administrative expenses (5,980) (6,432) (15,426)Other operating expenses 3 (13,365) (523) (1,411)Loss on disposal of subsidiary (563) - -Share of results of associates 1,363 483 1,612 -------- -------- ---------OPERATING PROFIT 156,093 98,116 256,670Investment revenue 3,886 394 1,998Finance costs (808) (1,330) (4,069) -------- -------- ---------PROFIT BEFORE TAX 159,171 97,180 254,599Tax 6 (19,003) (14,249) (33,670) -------- -------- ---------PROFIT ATTRIBUTABLE TO EQUITYHOLDERS OF PARENT COMPANY 140,168 82,931 220,929Dividends declared 7 (24,045) (7,550) (13,697) -------- -------- ---------RETAINED PROFIT FOR THE PERIOD 116,123 75,381 207,232 -------- -------- ---------Earnings per shareBasic (US cents) 4 100.00 59.93 159.04Diluted (US cents) 4 97.36 57.92 154.12 Group Statement of Total Recognised Income and Expense Unaudited Unaudited Audited Year 6 months to 6 months to Ended 30 June 30 June 31 December 2006 2005 2005 US$'000 US$'000 US$'000Exchange differences ontranslation of foreignoperations 330 (237) (377) ------- ------- ---------Net income/(loss)recognised directly inequity 330 (237) (377) Profit for the period 140,168 82,931 220,929 ------- ------- ---------Total recognised incomeand expense for theperiod 140,498 82,694 220,552 ======= ======= ========= Group Balance Sheet Unaudited Unaudited Audited 31 30 June 30 June December 2006 2005 2005 NOTES US$'000 US$'000 US$'000 ASSETSNon-current assetsIntangibleassets 24,828 10,341 27,500Property, plantand equipment 369,773 278,732 329,728Interests inassociates 28,657 26,094 27,294 ------- ------- -------- ------- ------- -------- 423,258 315,167 384,522 Current assetsInventories 15,506 8,283 12,667Trade and otherreceivables 55,807 85,522 64,133Cash and cashequivalents 215,659 24,678 124,781 ------- ------- -------- 286,972 118,483 201,581Assets held forsale 9 17,340 - - ------- ------- --------Total assets 727,570 433,650 586,103 ------- ------- -------- LIABILITIESCurrent liabilitiesTrade and otherpayables (58,644) (30,863) (57,793)Tax liabilities (13,397) (10,515) (26,216)Derivativefinancialinstruments - (15,172) -Obligationsunder financeleases - (695) (789)Dividendspayable (24,045) (7,550) ------- ------- -------- (96,086) (64,795) (84,798)Liabilitiesdirectlyassociated withassetsclassified asheld for sale 9 (7,651) - -Net currentassets 200,575 53,688 116,783 Non-current liabilitiesLong-termborrowings - (3,300) -Deferred taxliabilities (32,709) (23,243) (26,944)Obligationsunder financeleases - (2,315) (1,993) ------- ------- -------- (32,709) (28,858) (28,937) ------- ------- --------Totalliabilities (136,446) (93,653) (113,735) ------- ------- -------- NET ASSETS 591,124 339,997 472,368 ======= ======= ======== EQUITYShare capital 46,711 46,236 46,448Share premiumaccount 91,643 88,672 90,752Revaluationreserve 24,864 26,578 25,865Merger reserve (12,716) (12,716) (12,716)Other reserve 3,096 3,096 3,096Shares to beissued 3,894 4,377 2,745Retainedearnings 433,632 183,754 316,718 ------- ------- --------TOTAL EQUITY 8 591,124 339,997 472,368 ======= ======= ======== Group Cash Flow Statement Unaudited Unaudited Audited Year 6 months to 6 months to Ended 30 June 30 June 31 December 2006 2005 2005 US$'000 US$'000 US$'000 OPERATING ACTIVITIESCash flowgenerated byoperations 5 217,426 103,760 279,443Taxation paid (26,057) (1,626) (1,626) -------- ------- ---------NET CASH FROMOPERATINGACTIVITIES 191,369 102,134 277,818 INVESTING ACTIVITIESPurchases ofintangible fixedassets (14,060) (1,959) (18,638)Purchases ofproperty, plantand equipment (87,068) (76,005) (123,366)Deposits inrespect ofexplorationcommitments (8,144) - (8,838)Deposit inblocked account - (25,130) -Acquisition ofinterest inassociates - (26,010) (26,022)Cash received ondisposal ofsubsidiary 4,461 - -Interest received 3,737 485 2,088Dividendsreceived fromassociate - - 340 -------- ------- ---------NET CASH USED ININVESTINGACTIVITIES (101,074) (128,619) (174,436) FINANCING ACTIVITIESInterest paid (176) (615) (1,331)Arrangement andfacility fees (550) - (1,592)Interest elementof finance leaserentals (82) (617) (1,146)Dividends paid - - (13,697)Receipt fromloans - 15,000 -Repayment ofborrowings - (3,200) (1,500)Capital elementof finance leaserentals (44) (192) (420)Issue of ordinaryshare capital 1,153 1,058 1,492 -------- ------- ---------NET CASH PROVIDEDBY (USED IN)FINANCINGACTIVITIES 301 11,434 (18,194) NETINCREASE/(DECREASEIN CASH ANDCASH EQUIVALENTS 90,596 (15,051) 85,189CASH AND CASHEQUIVALENTS ATBEGINNING OFPERIOD 124,781 39,962 39,962Effect of foreignexchange ratechanges 282 (233) (370) -------- ------- ---------CASH AND CASHEQUIVALENTS ATEND OF PERIOD 215,659 24,678 124,781 ======== ======= ========= Notes to the Interim Report For the six months to 30 June 2006 1. Basis of Preparation The interim financial information in this report is prepared on the basis of theaccounting policies set out in the 2005 annual report and accounts and usingaccounting policies consistent with IFRS, including IAS 34 'Interim FinancialReporting'. The interim financial information for the 6 months ended 30 June2005 and 30 June 2006 is unaudited and does not constitute statutory accounts asdefined in section 240 of the Companies Act 1985. The auditors have carried outa review of the interim financial information for these periods and their reportis shown on page 12. The 2005 annual report and accounts, which received anunqualified opinion from the auditors and did not contain a statement undersection 237(2) or (3) of the Companies Act 1985, have been filed with theRegistrar of Companies. This interim report was approved by the Board of Directors on 13 September 2006. 2. Segmental Analysis 6 months ended 30 June 2006 West ------Analysis by geographical area Caspian Africa Total --------- --------- --------- US$'000 US$'000 US$'000Revenue 119,678 119,292 238,970 -------- ------- -------Segment result 85,554 81,041 166,595Share of results of associates 1,363Unallocated other operating expenses (7,018)Unallocated administrative expenses (4,847) --- --- -------Operating profit 156,093 ------- 6 months ended 30 June 2005 West ------Analysis by geographical area Caspian Africa Total --------- --------- --------- US$'000 US$'000 US$'000Revenue 95,153 72,927 168,080 -------- ------- -------Segment result 64,913 38,154 103,067Share of results of associates 483Unallocated other operating expenses (523)Unallocated administrative expenses (4,911) --- --- -------Operating profit 98,116 ------- 12 months ended 31 December 2005 West ------Analysis by geographical area Caspian Africa Total --------- --------- --------- US$'000 US$'000 US$'000Revenue 223,627 166,706 390,333 -------- ------- -------Segment result 165,324 104,109 269,433Share of results of associates 1,612Unallocated other operating expenses (1,411)Unallocated administrative expenses (12,964) --- --- -------Operating profit 256,670 ------- 3. Other Operating Expenses 6 months to 6 months to Year ended 30 June 30 June 31 December 2006 2005 2005 US$'000 US$'000 US$'000Write-offpre-licenceexpenditure 7,365 523 1,411 523Impairment ofexplorationexpenditure 6,000 - - -------- -------- --------- 13,365 523 1,411 ======== 523 ========= ======== Write off of pre-licence expenditure relates predominantly to Former SovietUnion and impairment of exploration expenditure relates to Egypt. 4. Earnings per Ordinary Share 6 months to 6 months to Year endedEarnings per ordinary share 30 June 30 June 31 December 2006 2005 2005 US$'000 US$'000 US$'000Earnings for the purposes ofbasic earnings per share(being profit attributable toequity holders of the parent) 140,168 82,931 220,929 ======== ========= ======== ======== ========= Number Number NumberNumber of sharesWeighted average number ofordinary shares for thepurposes of basic earnings pershare 140,168,651 138,380,457 138,915,811Effect of dilutive potential ordinary shares:Share options 2,367,858 2,949,357 2,780,343Long Term Incentive Plan 165,554 1,337,802 989,637Performance Share Plan 415,804 369,546 415,804Annual Profit Share Scheme 851,034 143,822 245,647 -------- -------- ---------Diluted number of shares 143,968,901 143,180,984 143,347,242 ======== ======== ========= Basic earnings per share (UScents) 100.00 59.93 159.04Diluted earnings per share (UScents) 97.36 57.92 154.12 5. Reconciliation of Operating Profit to Cash Flow Generated by Operations 6 months to 6 months to Year ended 30 June 30 June 31 December 2006 2005 2005 US$'000 US$'000 US$'000 Operating profit 156,093 98,116 256,670Adjustments for:Gain/(loss) on derivatives - 4,644 (10,528)Depreciation of property, plant andequipment 30,307 32,036 66,082Impairment of exploration expenditure 6,000 - -Non-cash charge for incentive schemes 2,697 2,518 7,431Share of associate's profit (1,363) (483) (1,612)Loss on disposal of subsidiary 563 - - -------- ------- --------Operating cash flows before movementsin working capital 194,297 136,831 318,043Increase in inventory (2,839) (7,269) (8,463)Decrease/(increase) in trade andother receivables 16,619 (22,410) (17,714)Increase/(decrease) in trade andother payables 9,349 (3,392) (12,423) -------- ------- --------Cash flow generated by operations 217,426 103,760 279,443 -------- ------- -------- 6. Taxation 6 months to 6 months to Year ended 30 June 30 June 31 December 2006 2005 2005 US$'000 US$'000 US$'000Current tax:UK corporation tax - - (235)Foreign tax 13,238 10,274 26,229 13,238 10,274 25,994 Deferred tax:Origination and reversal of temporarydifferences 5,765 3,975 7,676 5,765 3,975 7,676 19,003 14,249 33,670 The Group's tax liability in Congo is settled out of its share of oil under theterms of the relevant PSAs and is not reflected in the tax charge for the year. 7. Dividends A US$24.0 million dividend, being 9.5 pence per share (6 months ended 30 June2005: US$7.6 million, 3.0 pence per share), was declared on 27 March 2006 inrelation to the results of the year ended 31 December 2005. Since 30 June 2006the Directors have approved the payment of an interim dividend of 4.0 pence pershare (2005: 2.5 pence per share), which will be paid on 27 October 2006 toshareholders on the register at the close of business on 29 September 2006. 8. Changes in Equity 6 months to 6 months to Year ended 30 June 30 June 31 December 2006 2005 2005 US$'000 US$'000 US$'000 At 1 January 472,368 262,760 262,760Retained profit for the period 116,123 75,381 207,232Shares issued in the period 1,154 1,569 1,492Share based payments 1,149 524 1,261Exchange adjustments 330 (237) (377) At end of period 591,124 339,997 472,368 9. Post Balance Sheet Events Sale of 3.5% interest in M'Boundi field In 2005 Burren entered into an agreement to assign 3.5% of its 35% interest inthe M'Boundi field to SNPC, the state-owned national oil company of Congo,leaving Burren with a residual interest of 31.5%. The consideration for thisassignment was an extension of the M'Boundi development licence period from anoriginal expiry date of 2017, extendable to 2022, to a new expiry date of 2027,extendable to 2030. The transaction was subject to several conditions precedent, including Congoleseparliamentary approval and the completion of certain documentation to giveeffect to SNPC's participation in the contractor group, neither of which hadbeen satisfied at 31 December 2005. Parliamentary approval was received in March2006 and completion of the transaction occurred on 2 August 2006. The effectivedate of the transaction was 1 January 2006. Following the receipt of parliamentary approval the assets attributable to the3.5% were reclassified as "held for sale" at 30 June 2006. It was concluded,based on calculations as at the effective date in relation to the fair value ofthe 8 year licence extension, that no gain or loss arose in respect of thedisposal of the underlying interests. INDEPENDENT REVIEW REPORT TO BURREN ENERGY PLC Introduction We have been instructed by the Company to review the consolidated financialinformation for the six months ended 30 June 2006 which comprises the Groupincome statement, Group statement of total recognised income and expense, Groupbalance sheet, Group cash flow statement and related notes 1 to 9. We have readthe other information contained in the interim report and considered whether itcontains any apparent misstatements or material inconsistencies with thefinancial information. This report is made solely to the Company in accordance with Bulletin 1999/4issued by the Auditing Practices Board. Our work has been undertaken so that wemight state to the Company those matters we are required to state to them in anindependent review report and for no other purpose. To the fullest extentpermitted by law, we do not accept or assume responsibility to anyone other thanthe Company, for our review work, for this report, or for the conclusions wehave formed. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by, the directors. The directorsare responsible for preparing the interim report in accordance with the ListingRules of the Financial Services Authority and the requirements of IAS 34 whichrequire that the accounting policies and presentation applied to the interimfigures are consistent with those applied in preparing the preceding annualaccounts except where any changes, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with the guidance contained in Bulletin1999/4 issued by the Auditing Practices Board for use in the United Kingdom. Areview consists principally of making enquiries of Group management and applyinganalytical procedures to the financial information and underlying financial dataand, based thereon, assessing whether the accounting policies and presentationhave been consistently applied unless otherwise disclosed. A review excludesaudit procedures such as tests of controls and verification of assets,liabilities and transactions. It is substantially less in scope than an auditperformed in accordance with International Standards on Auditing (UK andIreland) and therefore provides a lower level of assurance than an audit.Accordingly, we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 June 2006. Deloitte & Touche LLPChartered AccountantsLondon15 September 2006 Notes: A review does not provide assurance on the maintenance and integrity ofthe website, including controls used to achieve this, and in particular onwhether any changes may have occurred to the financial information since firstpublished. These matters are the responsibility of the directors but no controlprocedures can provide absolute assurance in this area. Legislation in the United Kingdom governing the preparation and dissemination offinancial information differs from legislation in other jurisdictions. Glossary bbl barrel of oilbopd barrels of oil per dayCongo The Republic of Congo (Brazzaville)PSA or PSC Production Sharing Agreement or Production Sharing ContractSNPC Societe Nationale des Petroles Congolais, the state-owned national oil company of Congo This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Burford Capital